Procurement Startup Raises $1.8M with Eye Toward Serving Cities

Vendor Registry thinks it can make procurement less painful.

After more than two years and 200 customers, Vendor Registry is ready to hit the accelerator.

The company, which is aiming to modernize and simplify the procurement process with a focus on smaller local governments, closed on a $1.8 million seed round at the end of January. The round, which five investors participated in, was oversubscribed by about $300,000.

“It means that we can accelerate our growth,” said Chris Van Beke, the company’s chief executive officer. “That’ll be focused in sales and marketing, so getting our name out there on a national scale, as well as our customer resources so we can really serve them.”

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The firm has essentially set up a registry where vendors and government entities can set up profiles. Governments can send out bid notifications, keep track of who’s responded and facilitate conversations between departments. A big piece of the pitch is increasing vendor competition, but for many it’s just about meeting quotas for how many bids a city needs before it can hand out an award. For vendors, the idea is to set up easy cross-registration with multiple government entities and a way to communicate easier with public officials.

It’s all about making the process less painful, Van Beke said.

“Every government looks different to the vendor, and to government every vendor looks different,” he said. “But if you get beyond the noise, you really find a lot of commonality.”

Government procurement as a whole is beginning to toy around with some disruptive ideas right now, especially when it comes to tech buys — ideas such as micropurchasing and modular contracts that are friendly to an iterative building approach. But for Vendor Registry, the push is much more about making the existing procurement system easier for all involved.

That’s intentional.

“I’d say 60 percent of the governments that we deal with have one purchasing person on staff or they just have the financing director do it, so they don’t have the time for [sophistication],” said co-founder Brian Strong. “They’re just trying to get through the day.”

As such, Vendor Registry is especially targeting smaller government buyers such as suburban municipalities — places with relatively sizable populations, but lacking the resources of an urban core. And they’re introducing their package on a freemium model; that is, government and vendor users sign up for free but have the option of paying more for premium features such as data analytics and vendor response tracking.

Not that urban cores are out of the question. In fact, one of Vendor Registry’s clients is the city of Knoxville, Tenn., where the company is headquartered.

But Griffin, Ga., fits better into Vendor Registry’s target customer profile. The city, which sits on the outer edges of the Atlanta metropolitan area, has a population of about 24,000 and a central procurement office consisting of exactly one person — Cindy Fay. As in many smaller municipal governments, the procurement analyst handles the jobs that impact whole swaths of departments at once. Department-specific jobs go to the offices they affect.

But for things like vehicles or copiers, it all goes through Fay. In the past, she just used paper and Microsoft Excel to keep track of where things were. And like so many manual processes in government, it was a leaky system.

“When everything is manual, things tend to get lost in the shuffle,” Fay said. “And even though you may keep a file on your computer, things happen, and your paper documents as far as submissions or what have you doesn’t always stay where it needs to be.”

For Fay, three pieces of the company are notable: cost, responsiveness and ability to generate competition. The lack of up-front money required to start using the product made it easy to justify for the city and more convincing for vendors to sign up. The company has paid attention to her feedback and helped her use the tool, she said.

And it has helped both her and the other city departments get more bids, increasing competitiveness — and potentially lowering the price.

“We just finished a printing job and I just sent it out to everybody that was registered to do print jobs, and this time I got a lot more responses from people that I wouldn’t have even thought of previously,” Fay said. “So it will grow the competition a lot, because the more people find out about it the more people will be interested.”

The venture capital firms that participated in the seed round are enthusiastic about the company’s potential. After all, there are a lot of city governments out there that need to buy things — more than 19,000, according to the National League of Cities. Most of them are small.

When talking with city government representatives as part of his firm’s research on Vendor Registry, John McIlwraith of Allos Ventures said he heard consistent complaints about the status quo of procurement.

“If you look at the ramp of the company, to be north of 200 local governments in a relatively short period of time, and accelerating, and including rather large local governments, that tells you something,” McIlwraith said.

To have that many customers before so much as closing on a seed round was a selling point for Paul Clark from VentureSouth, another Vendor Registry backer. It hints at scalability, for starters.

“One [trait we look for] is companies that can scale very quickly without requiring millions of dollars in VC money,” Clark said, adding that he also finds the round’s oversubscription encouraging. While raising too much money can be a concern in the world of tech startups, Clark found the round impressive.

“One of the problems in the southeast is they don’t have a lot of resources to raise money," he said, "so it’s a really unusual story to raise more money than they intended."

Ben Miller is the business beat staff writer for Government Technology. His reporting experience includes breaking news, business, community features and technical subjects. He holds a Bachelor’s degree in journalism from the Reynolds School of Journalism at the University of Nevada, Reno, and lives in Sacramento, Calif.